Residential Real Estate

CLOSING CUSTOMS APPROVED BY THE CLOSING PRACTICES COMMITTEE ONJanuary 7, 2009, SUBMITTED FOR APPROVAL BY THE MIDDLESEX COUNTY BAR

Residential Real Estate

Closing Customs

MiddlesexCounty

Introduction

It appears that “closing customs” for the Middlesex Bar Association were last promulgated in 1984. Significant subsequent changes in the closing process, and more recently the requirement of title insurance companies with respect to the handling of mortgage payoff checks, prompted the Middlesex County Bar Association to reestablish its Closing Practices Committee to address closing customs in general andclosing checks procedures in particular.

The Closing Customs Committee started thisprocess by first reviewing the matter of closing checks and procedures with respect to them.Thus, the closing customspromulgated herein are not intended to be all-inclusive, and the Committee may propose amendments as additional areas are reviewed and approved.

For purposes of guidance, the Committee reviewed closing customs from other Connecticut counties, including recent revisions, in the hope of establishing closing customs having general acceptance. In many instances, the Committee has used language and followed customs adopted in one or more other counties. The Committee hopes that such increased uniformity willfacilitate the closing process around the State.

These customs were ratified by the full Bar Association at a regular meeting, and are effective as of the date noted. The customs may be superseded by any written contract of the parties, but in areas where the contract is silent, these customs are to be followed.

______

Closing Customs 1 through 9 were adopted at a meeting of the Middlesex County Bar Association on January22, 2009 and effective as of that date.

Residential Real Estate Closing Customs

For MiddlesexCounty

1. FUNDS AT CLOSING

In transactions in which a HUD Settlement Statement is used, the HUD Settlement Agent shall cause funds to be disbursed in accordance with the Statement. If no HUD Settlement Statement is used, the Buyer’s attorney will cut all checks.

A Trust Account check from the disbursing attorneyshall be acceptable unless Seller’s attorney gives reasonable notice to the disbursing attorney that a bank check, certified check, or a wire transfer of funds is required. Reasonable notice is defined as not less than one full business day. If a bank check, certified check, or a wire transfer of funds is required, the availability of such funds may necessitate a closing later in the business day, or a delay in disbursing funds until the following business day.

No attorney shall be obligated to release any Trust Account checks without having confirmed that all such checks are backed by good funds dedicated to that transaction.

2. RELEASES AT CLOSING

In the event Seller’s title is subject to one or more encumbrances required to be released, Seller’s attorney shall deliver to Buyer’s attorney a release for each such encumbrance together with recording fees for all such releases. Seller’s attorney shall immediatelycause any required payoff proceeds to be delivered to theapplicable encumbrancer(s).

3. UNAVAILABILITY OF RELEASE OF MORTGAGE LIEN AT CLOSING

In the event Seller’s title is encumbered by a mortgage lien(s) for which Seller’s attorney is unable to deliver a release of mortgage at closing, the parties shall close the transaction, provided Seller’s attorney delivers the following at or before closing:

If the debt secured by the mortgage lien previously has been paid but the lien is not released from the Land Records at the time of the closing:

A. Written evidence that the loan secured by the unreleased mortgage has been paid in such form as sufficient to obtain the release of the mortgage in accordance with C.G.S. Section 49-8a.

B. Written agreement, in a form similar to that attached as Exhibit “A”, that the Seller’s attorney will make prompt, reasonable and diligent efforts to obtain the release of mortgage lien and provide same to Buyer’s attorney, along with recording fees for such release and that, in the event that such attorney, for any reason, is unable to obtain the release of mortgage lien within 60 days, that such attorney shall take such immediate action pursuant to C.G.S. Section 49-8a as required to effectuate the release of the mortgage in accordance with the referenced statute.

If the debt secured by the mortgage lien is to be paid at the time of the closing by the Seller’s attorney:

A. Mortgagee’s written payoff statement as defined by C.G.S. Section 49-8a with respect to each loan secured by such mortgage(s);

Written confirmation (See Attached Exhibit “B”):

(1) that Seller’s attorney has made and will make prompt, reasonable and diligent efforts to obtain the release of mortgage lien and provide same to Buyer’s attorney, along with recording fees for suchrelease;

(2) that Seller’s attorney shall immediately cause the mortgage payoffproceedsto be delivered to Seller’s mortgagee(s) in accordance with mortgagee’s payoff statement; and

(3) that, in the event that Seller’s attorney, for any reason, is unable to obtain the release of mortgage lien within 60 days from the receipt of payment by the Mortgagee(s), Sellers’ attorney shall take such immediate action as is necessary to deliver to Buyer’s attorney a release of mortgage affidavit and exhibits pursuant to C.G.S. Section 49-8a, together with recording fees for such affidavit(s) and exhibits and the Sellers’ indemnity that such funds as are necessary to payoff the loanproceeds will be supplied by them.

4. ADJUSTMENTS FOR OIL OR PROPANE IN THE TANK

The oil or propane in the tank shall be adjusted in favor of the Seller. Seller shall provide at or before the closing a written statement from Seller’s oil or propane supplier of the amount of oil or propane in the tank within 48 hours of the closing and the current price of that oil or propane.

5. COMMON INTEREST COMMUNITIES – ADJUSTMENTS OF WORKING CAPITAL ACCOUNT CONTRIBUTIONS

Contributions required to be made by the first purchaser of a unit in a common interest community to a working capital account or reserve account of the community association are not subject to recoupment or other adjustment on subsequent resale of the unit.

6. COMMON INTEREST COMMUNITIES – SPECIAL ASSESSMENTS

Special assessments of a common interest community, not part of the regularly budgeted common expense assessments, are not subject to adjustment. If payment of all or any portion of the special assessments is due and payable prior to the original closing date stated in the contract, the amount then due (without regard to any grace period) is payable by the Seller; if all or any portion of the special assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the Buyer’s responsibility.

7. COMMON INTEREST COMMUNITIES – MONTHLY ADJUSTMENT OF COMMON CHARGES

Regularly budgeted common expense assessments are adjusted as if they were payable on the first day of the month in advance, whether such assessments are in fact made on an annual basis and payable monthly, or assessed on a monthly basis.

8. SEWER, WATER OR SPECIAL ASSESSMENTS

Unless the Buyer and Seller otherwise agree in writing, all assessments against the property for repairs or improvements which have resulted in a caveat or a lien of a liquidated sum prior to the original closing date stated in the contract, are to be paid in full by Seller at or before the closing, regardless of when the payments are due. In those instances where the Buyer has agreed to assume and pay any outstanding assessments, and payment of all or any portion of the principal installment on account of said assessment is due and payable (without regard to any grace period) prior to the original closing date stated in the contract, such amount then due is payable by the Seller; and if all or any portion of a principal installment on account of such assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the Buyer's responsibility. Interest on such assessments shall be adjusted as being payable in arrears. The Buyer would therefore receive a credit at the closing for interest on the outstanding principal balance from the date to which interest has been paid to the date of the closing. Interest only shall be adjusted pro-rated as of the date of closing. Principal payments shall not be pro-rated. In the event the contract is silent as to the existence of or payment of an assessment, the Seller shall pay the assessment in full at closing.

9. REAL ESTATE TAXES

Real estate taxes shall be adjusted as of the date of the closing unless otherwise agreed. The tax year shall be the fiscal year of the town in which the property is located. All MiddlesexCounty towns operate on a fiscal year commencing July 1st and ending June 30th. Real estate taxes assessed upon the List of the preceding October 1st shall be considered to be applicable to the subsequent fiscal year. This method of tax adjustment would also apply to any other taxes levied upon the same grand list, for example fire district taxes and association taxes. Such adjustments are made on the basis of a 365-day year. In those circumstances where taxes have been reduced or adjusted in accordance with applicable statute, law or regulation (such as C.G.S Section 12-129b, commonly known as “frozen taxes” or C.G.S. Section 12-170aa, commonly known as “circuit breaker taxes”) shall only be adjusted on the basis of actual taxes paid by the Seller in advance.

When closings take place during the months of July and January, it shall be the responsibility of the Sellerto prove the payment of taxes. If taxes are unpaid, Seller shall pay the taxes at or before closing,and adjustment shall be made to the Seller for the actual taxes paid. In the event a Seller’s mortgagee has “disbursed” taxes and the tax collector has not yet received such payment, an escrow shall be established in the amount equal to the taxes due plus two (2) months interest on said bill. The designation of the escrow agent and the terms of such escrow agreement shall be established by Buyer’s and Seller’s counsel.

EXHIBIT A

UNDERTAKING AND INDEMNITY FOR PAID MORTGAGE

SALE OF: ______

SELLER(S):______

BUYER(S):______

SELLER’S INDEMNIFICATION

The undersigned, being the seller(s) of the above referenced property, hereby acknowledge that the property is presently encumbered by the following mortgage:

Mortgage from ______to ______dated ______and recorded in Book ___ at Page ____ of the ______Land Records, and assigned to ______by Assignment dated ______and recorded in Book ____ at Page ____ of the ______Land Records.

The attorney signing below has obtained evidence sufficient to prepare an affidavit to satisfy the requirements Section 49-8a of the Connecticut General Statutes, and/or The Connecticut Standards of Title prepared by the Connecticut Bar Association, as applicable, in order to release this mortgage.

In consideration of the issuance of policies of title insurance without exception to the above-referenced mortgage, the undersigned seller(s) agrees(s) to indemnify and hold harmless the Buyer(s), their attorney, and their title company from and against all loss, cost, or damage, including attorney’s fees and court costs, arising or resulting from any claim made in connection with said mortgage or the failure to obtain a proper release of said mortgage.

______

SellerDate Seller Date

SELLER’S ATTORNEY’S UNDERTAKING

The undersigned hereby certifies that I am an attorney licensed to practice in the State of Connecticut. I am in possession of evidence of payment of said mortgage sufficient to prepare an affidavit to satisfy the requirements Section 49-8a of the Connecticut General Statutes, or the Connecticut Standards of Title, as applicable, in order to release this mortgage. I will be responsible for obtaining and having recorded a proper release of the mortgage within 60 days of the date hereof.

If I am unable to obtain a proper release within 60 days of the date hereof, I will be responsible for the preparation of an affidavit in accordance with Section 49-8a of the Connecticut General Statutes and the delivery of the same to you with the appropriate fee for recordation.

I further agree to indemnify and hold harmless the Buyer(s), their attorney, and their title company from and against all loss, cost, or damage, including attorney’s fees and court costs, arising or resulting from the failure to perform the undertaking herein described. No claim shall be made under this indemnification paragraph without providing the undersigned 15 business days prior written notice that a claim will be made under this paragraph.

______

AttorneyStreet Address

______

Date and Phone NumberCity, State, Zip Code

Exhibit B

UNDERTAKING AND INDEMNITY FOR PAYOFF OF EXISTING MORTGAGE

SALE OF: ______

SELLER(S):______

BUYER(S):______

SELLER’S INDEMNIFICATION

The undersigned, being the seller(s) of the above referenced property, hereby acknowledge that the property is presently encumbered by the following mortgage:

The attorney signing below has obtained a payoff statement for this mortgage and I/we have directed said attorney to fully pay and satisfy said mortgage from the closing proceeds. In the event the payoff statement provided is not accurate, I/we agree to immediately tender all funds necessary to pay this mortgage in full.

______

Seller Date Seller Date

SELLER’S ATTORNEY’S UNDERTAKING

The undersigned hereby certifies that I am an attorney licensed to practice in the State of Connecticut. I received a payoff statement for the above referenced mortgage, and I will send funds todayin the form of Buyer’s attorney’s Trustee Account checks in accordance with the attached payoff statement to the mortgagee sufficient to pay off this mortgage in full. Upon payment in full of said loan, I will be responsible for obtaining and having recorded a proper release of the mortgage. Attached hereto is a copy of the payoff statement, payoff check and the transmittal letter to the mortgagee.If I am unable to obtain a proper release within 60 days of the date hereof, I will be responsible for the preparation of an affidavit in accordance with Section 49-8a of the Connecticut General Statutes and the delivery of the same to you with the appropriate fee for recordation.

______

AttorneyStreet Address

______

Date and Phone NumberCity, State, Zip Code

BUYER’S ATTORNEY’S UNDERTAKING

The undersigned hereby certifies that I am an attorney licensed to practice in the State of Connecticut. I have confirmed receipt of good funds for the above-referenced transaction and therefore I have delivered good funds in the form of my Trustee Account checks to Seller’s Attorney to pay the above-referenced mortgage.The undersigned agrees(s) to indemnify and hold harmless the Seller(s), their attorney, and their mortgagee from and against all loss, cost, or damage, including attorney’s fees and court costs, arising or resulting from the failure to perform the undertaking herein described.

______

Attorney Street Address

______

Date and Phone Number City, State, Zip Code